Kitchen Electrics uses a perpetual inventory system. The following are three rec

Question

Kitchen Electrics uses a perpetual inventory system. The following are three recent merchandising transactions: Apr. 10 Purchased 10 refrigerators from Polar Co. on account. Invoice price, $350 per unit, for a total of $3,500. The terms of purchase were 2/10, n/30. Apr. 15 Sold one of these refrigerators for $550 cash. Apr. 20 Paid the account payable to Polar Co. within the discount period.

a-1. Prepare journal entries to record these transactions assuming that Kitchen Electrics records purchases of merchandise at net cost.

a.2- Prepare journal entries to record these transactions assuming that Kitchen Electrics records purchases of merchandise at gross invoice price

Explanation / Answer

Journal entries

1)Purchases 3500

Polar co. 3500

2) Cash 550

Sales 550

3) Polar co. 3500

Cash 3500

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